Shift4 Payments (FOUR) risk factors, FY2024 10-K

Risks Related to the Transactions

1. 01The announcement and pendency of the Offer and the Merger may have an adverse effect on our business and results of operations, and our failure to complete the transactions completed by the Transaction Agreement could have an adverse effect on our business, financial condition, results of operations, and stock price
2. 02While the Transactions are pending, we are subject to business uncertainties and contractual restrictions that could harm our business, financial condition, and results of operations
3. 03Litigation may arise in connection with the Transactions, which could be costly, prevent consummation of the Transactions, divert management’s attention, and otherwise harm our business, financial condition, and results of operations
4. 04Following the consummation of the Transactions, we may be unable to integrate the Global Blue business successfully or realize the anticipated synergies and related benefits of the Transactions
5. 05Our future results will suffer if we do not effectively manage our expanded operations following the Transactions
6. 06The market price of our common stock may decline as a result of the completion of the Transactions

Business risks

1. 07Substantial and increasingly intense competition worldwide in the financial services, payments and payment technology industries may adversely affect our overall business and operations
2. 08Potential changes in the competitive landscape, including disintermediation from other participants in the payments chain, could harm our business
3. 09Global economic, political and other conditions may adversely affect trends in consumer, business and government spending, which may adversely impact the demand for our services and our revenue and profitability
4. 10We are exposed to fluctuations in inflation, which could negatively affect our business, financial condition and results of operations
5. 11Our ability to anticipate and respond to changing industry trends and the needs and preferences of our merchants and consumers may adversely affect our competitiveness or the demand for our products and services
6. 12Our use of artificial intelligence and machine learning tools may subject us to additional risks and may adversely impact our reputation and the performance of our products, service offerings and business
7. 13Because we rely on third-party vendors to provide products and services, we could be adversely impacted if they fail to fulfill their obligations
8. 14We also rely on third parties for specific software and devices used in providing our products and services. Some of these organizations and service providers provide similar services and technology to our competitors, and we do not have long-term or exclusive contracts with them
9. 15Acquisitions, dispositions, and other strategic transactions create certain risks and may adversely affect our business, financial condition or results of operations
10. 16Restrictions on Shift4’s dealings with Vectron may delay the implementation of our acquisition strategy and could adversely impact our results of operations
11. 17If Shift4 enters into a DPLTA with Vectron, the Company may be subject to certain risks that could adversely affect its business, financial condition or results of operations
12. 18We may experience failures in our IT Systems due to software defects, misconfigurations, “bugs”, computer viruses and development delays, which could damage customer relations, and our reputation and brand, and expose us to material financial penalties and legal liability
13. 19We may not be able to continue to expand our share of the existing payment processing markets or expand into new markets, which would inhibit our ability to grow and increase our profitability
14. 20As we expand into new markets, we are subject to additional risks associated with our international operations, including compliance with and changes in foreign regulations and governmental policies
15. 21Our services and products must integrate with a variety of operating systems, software, devices and web browsers, and our business may be materially and adversely affected if we are unable to ensure that our services interoperate with such operating systems, software, devices and web browsers
16. 22We depend, in part, on our merchant and software partner relationships and strategic partnerships with various institutions to operate and grow our business. If we are unable to maintain these relationships and partnerships, our business may be adversely affected
17. 23A significant number of our merchants are small- and medium-sized businesses and small affiliates of large companies, which can be more difficult and costly to retain than larger enterprises and may increase the impact of economic fluctuations on us
18. 24Degradation of the quality of the products and services we offer, including support services, could adversely impact our ability to attract and retain merchants and software partners
19. 25Our business is subject to the risk of natural disasters, adverse weather events and other catastrophic events, and to interruption by manmade problems such as terrorism
20. 26Health concerns arising from the outbreak of an epidemic or pandemic may have an adverse effect on our business
21. 27Increased customer attrition could cause our financial results to decline
22. 28Fraud by merchants or others could adversely affect our business, financial condition or results of operations
23. 29Our ability to recruit, retain and develop qualified personnel in compliance with applicable federal and other laws and regulations is critical to our success and growth
24. 30We incur chargeback liability when our merchants refuse to or cannot reimburse chargebacks resolved in favor of their customers. Any increase in chargebacks not paid by our merchants may adversely affect our business, financial condition or results of operations
25. 31We expend significant resources pursuing sales opportunities, and if we fail to close sales after expending significant time and resources to do so, our business, financial condition and results of operations could be adversely affected
26. 32There may be a decline in the use of cards as a payment mechanism for consumers or adverse developments with respect to the card industry in general
27. 33Our failure to address the operational, compliance and regulatory risks associated with our payment methods or practices could damage our reputation and brand and may cause our business and results of operations to suffer
28. 34Increases in card network fees and other changes to fee arrangements may result in the loss of merchants or a reduction in our earnings
29. 35Certain key components are procured from a limited number of suppliers. Thus, we are at risk of shortage, price increases, tariffs, changes, delay, or discontinuation of key components, which could disrupt and materially and adversely affect our business

Financial risks

1. 36Our balance sheet includes significant amounts of goodwill and intangible assets. The impairment of a significant portion of these assets would negatively affect our business, financial condition or results of operations
2. 37Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our debt obligations
3. 38Our Revolving Credit Facility provides the ability to borrow at rates based on the Secured Overnight Financing Rate (“SOFR”). The Revolving Credit Facility had remaining capacity of $450.0 million as of December 31, 2024
4. 39Restrictions imposed by the agreements governing our Notes and our Revolving Credit Facility may materially limit our ability to operate our business and finance our future operations or capital needs
5. 40Accelerated funding programs increase our working capital requirements and expose us to incremental credit risk, and if we are unable to access or raise sufficient liquidity to address these funding programs we may be exposed to additional competitive risk
6. 41Our results of operations may be adversely affected by changes in foreign currency exchange rates
7. 42New or revised tax regulations or their interpretations, or becoming subject to additional foreign or U.S. federal, state or local taxes that cannot be passed through to our merchants or partners, could reduce our net income
8. 43If we cannot pass along increases in interchange and other fees from payment networks to our merchants, our operating margins would be reduced
9. 44The conditional conversion feature of the 2025 Convertible Notes or 2027 Convertible Notes, if triggered, may adversely affect our financial condition and results of operations

Legal and regulatory risks

1. 45Failure to comply with the FCPA, anti-money laundering, economic and trade sanctions regulations, and similar laws could subject us to penalties and other adverse consequences
2. 46Failure to protect, enforce and defend our intellectual property rights may diminish our competitive advantages or interfere with our ability to market and promote our products and services
3. 47Our existing patents may not be valid, and we may not be able to obtain and enforce additional patents to protect our proprietary rights from use by potential competitors. Companies with other patents could require us to stop using or pay to use required technology
4. 48Failure to comply with, or changes in, laws, regulations, executive orders and enforcement activities may adversely affect the products, services and markets in which we operate
5. 49From time to time we are subject to various legal proceedings which could adversely affect our business, financial condition or results of operations

Risks related to our organizational structure

1. 50The TRA with the Continuing Equity Owners and the Blocker Shareholders requires us to make cash payments to them in respect of certain tax benefits to which we may become entitled, and we expect that the payments we are required to make will be substantial
2. 51Our organizational structure, including the TRA, confers certain benefits upon the Continuing Equity Owners and the Blocker Shareholders that will not benefit holders of our Class A common stock to the same extent that it will benefit the Continuing Equity Owners and the Blocker Shareholders
3. 52In certain cases, payments under the TRA to the Continuing Equity Owners and the Blocker Shareholders may be accelerated or significantly exceed any actual benefits we realize in respect of the tax attributes subject to the TRA
4. 53We will not be reimbursed for any payments made to the Continuing Equity Owners or the Blocker Shareholders under the TRA in the event that any tax benefits are disallowed
5. 54Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition
6. 55If we redeem or repurchase shares of our stock in the future, we could be subject to excise tax
7. 56Our ability to use our net operating losses (“NOLs”) to offset future taxable income may be subject to certain limitations

Risks related to the ownership of our Class A common stock

1. 57Our Founder has significant influence over us, including control over decisions that require the approval of stockholders, including a change in control
2. 58We are a “controlled company” within the meaning of the NYSE rules and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You may not have the same protections afforded to stockholders of companies that are subject to such corporate governance requirements
3. 59Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE. Our status as a controlled company could make our Class A common stock less attractive to some investors or otherwise harm our stock price
4. 60Certain provisions of Delaware law and antitakeover provisions in our organizational documents could delay or prevent a change of control
5. 61These antitakeover provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares
6. 62Future sales, or the perception of future sales, by us or our existing stockholders in the public market could cause the market price for our Class A common stock to decline
7. 63Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk
8. 64The increasing focus on sustainability and environmental, social and governance practices (“ESG”) could increase our costs, harm our reputation and adversely impact our financial results
9. 65If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, or if there is any fluctuation in our credit rating, our stock price and trading volume could decline
10. 66Short sellers of our stock may be manipulative and may drive down the market price of our common stock
11. 67In April 2023, short seller Blue Orca Capital issued a short report on us, resulting in a decrease in the price of our Class A common stock on the day the short report was issued. Subsequently, numerous lawsuits were filed against us, which the court dismissed with prejudice
12. 68The impact of war, including in Europe and the Middle East, on the global economy, energy supplies and raw materials is uncertain, but may prove to negatively impact our business and operations